Rental contracts for primary homes renew automatically, and non-renewal now costs compensation

Automatic summary, not yet reviewed

1. When a rental contract for a primary home reaches its minimum term (five years, or seven if the landlord is a company), it automatically renews for successive terms of the same length, unless either party gives notice that it does not want to renew. The landlord must give six months' notice and the tenant two months'.
2. If the landlord does not renew the contract, they must pay the tenant compensation of at least twelve monthly payments of the rent for a similar home, calculated using the state reference price system. It is paid when the home is handed over and can never be less than one monthly payment per year of residence.
3. No compensation is due if the landlord needs the home for themselves or close relatives (and if they do not move in within three months, the tenant still gets paid), if the tenant does not actually live in the apartment, if the tenant has another suitable home in the same municipality, if the parties sign a new contract, or if the tenant rejects a reasonable offer of a new contract of at least five years.
4. Extraordinary extensions remain in place: up to one more year for tenants in a proven situation of vulnerability, and up to three more years (in annual terms) in areas declared as tight residential markets. They cannot be combined with each other or with other legal extensions, and the tight-market extension takes priority.
5. The new rule applies to existing contracts only for expirations after it takes effect. Contracts already in their tacit renewal period keep the old rules until that period ends, and non-renewal notices already given remain valid and do not trigger compensation.
6. The rule takes effect the day after its publication in the Official State Gazette (Boletín Oficial del Estado).

Who it affects

• Landlords of primary homes: They must give six months' notice if they do not want to renew and, in that case, pay compensation of at least twelve monthly payments.
• Tenants in primary homes: They gain continuity in their rental and, if the landlord does not renew without a justified reason, they receive compensation when handing over the apartment.
• Vulnerable tenants or those in tight-market areas: They can request extraordinary extensions of one or three years if they prove vulnerability or live in a tight-market area.
• Contracts signed before the reform: Contracts already in their tacit renewal period keep the old rules until they expire.

Words worth knowing

Prórroga tácita

Automatic continuation of the contract when its term ends, without anyone having to do anything.

Arrendatario y arrendador

Arrendatario is the tenant; arrendador is the landlord.

Persona jurídica

A company or organization, as opposed to a natural person.

Tácita reconducción

A situation where the tenant keeps living in the apartment and paying rent after the contract ends, and a new rental contract is understood to exist.

Zona de mercado residencial tensionado

An area officially declared where rents are especially high or have risen sharply.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries